Apple and Tesla decline to comment on merger rumors

A meeting last year between top Apple brass and Tesla CEO Elon Musk has sparked speculation that the hugely successful electronics maker is interested in purchasing the forward-thinking electric car company.

According to the San Francisco Chronicle, the man in charge of
mergers and acquisitions at Apple, Adrian Perica, met with Elon
Musk about one year ago. Details of the meeting are unknown, but
citing an unnamed source, the newspaper suggested the secret
rendezvous – which likely involved Apple CEO Tim Cook – meant the
iPhone maker was looking to deal.

Interestingly, a few months after the meeting occurred, financial
analyst Adnaan Ahmad published an open letter to Cook urging the
company to purchase Tesla.

“The auto industry is going through a technological
discontinuity in its shift to hybrid and electric vehicles,”
Ahmad’s letter reads. “This is still in its very early
innings. Apple needs know-how (technology, platform strategy and
dealer network) in this space and hence I propose that you should
buy Tesla.”

"I know this is radical and potentially 'transformative' but
this would radically alter Apple's growth profile. In Elon Musk,
you could strike up a partnership and obtain a new iconic partner
to lead Apple's innovation drive."

When asked about the rumors, both Apple and Tesla representatives
refused to comment on the possible deal.

There’s no evidence to suggest a purchase was actually discussed
between the businessmen last year – Apple typically avoids large
acquisitions despite its immense cash reserves, and Tesla itself
has access to plenty of funds on its own – but the possibility
has generated intense interest from analysts who view Apple’s
current path as unsustainable.

While iPhones and iPads continue to be enormously popular, mobile
competition from the likes of Google and Samsung has steadily
become more formidable, and Apple’s ability to sustain large
profit margins on its products has been cast under suspicion. The
company has also yet to introduce a breakthrough new product
since the passing of founder Steve Jobs, leaving some to wonder
if Apple is treading water.

"People are questioning Cook's status as a leader of an
innovative company. Maybe he's just a great operator," Josh
Stewart, portfolio manager at the Wasatch World Innovators Fund,
told USA Today in late 2013.

Purchasing Tesla would immediately give Apple a foothold into an
automotive industry that some believe is ripe for disruption, but
analyst Andrea James of Dougherty & Co. investment bank
believes a “partnership” between the two is a far more likely
outcome. With the sales of the Model S electric sedan on the
rise, Tesla's position is stable, at least for the moment.

Musk himself seemingly denied acquisition rumors last June when
he tweeted, “Forgot to say one thing at Tesla annual
shareholders meeting: just as my money was the first in, it will
be the last out.”

According to Business Insider, its possible that Tesla could
cooperate with Apple to incorporate the company’s technology into
its future vehicles – features such as touch screens, the Siri
virtual assistant, and more.

Meanwhile, the Apple-focused website 9to5Mac noted that Tesla is
gearing up to unveil a factory that will more than double the
worldwide production of lithium-ion batteries. Considering the
number of Apple products employing these batteries, it’s possible
the tech giant wants to invest in or be a part of that effort in
some way.

As noted by the Chronicle, Apple is also looking into other
possibilities when it comes to expanding its portfolio. In
addition to bringing wearable technology such as smartwatches and
televisions to the market, the company is exploring the
development of heart-related medical devices, such as software
and sensors that could predict heart attacks before they occur.

"Apple must increasingly rely on new products to reignite
growth beyond the vision" of Steve Jobs, said Edward Jones
Investments analyst Bill Kreher to the newspaper. "They need
the next big thing."